Multiple reverse stock splits (investors beware!)

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• 作者：Claire E. Crutchley (1)
  Steven Swidler (1)
  
  1. Department of Finance ; Auburn University ; 303 Lowder Business Building ; Auburn ; AL ; 36849 ; USA
  
• 关键词：Reverse stock splits ; Liquidity ; Shares ; Information ; G14 ; G34
• 刊名：Journal of Economics and Finance
• 出版年：2015
• 出版时间：April 2015
• 年：2015
• 卷：39
• 期：2
• 页码：357-369
• 全文大小：260 KB
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• 刊物主题：Economics general; Financial Economics; Finance/Investment/Banking;
• 出版者：Springer US
• ISSN：1938-9744

文摘

This study compares firms that implement multiple reverse stock splits to firms with only one reverse stock split. Reverse stock splits are usually implemented by firms trying to increase their stock price to remain listed on stock exchanges or widen stock ownership especially by institutional investors. Firms that declare multiple reverse splits tend to have lower returns following the reverse split and even less liquidity than one reverse split firms. Sixty five percent of the firms with multiple reverse splits end up being liquidated or delisted. If one reverse split is viewed as desperation, then multiple reverse stock splits are a sign of extreme distress.